Shared Services: Where the Real Potential for Government Efficiency Lies

Merging jurisdictions to reduce costs seems like a good idea, but it's fraught with difficulty. The real potential for efficiency lies in sharing services.

Frequently in Nebraska, as in many states, at the beginning of the state legislative session there are calls for reducing the number of local governments to reduce costs. Proposals include city-county consolidations, county mergers and elimination of relatively invisible special districts such as townships and my favorite, cemetery districts. Except for periodic school-district consolidations, these proposals do not get serious consideration.

While a state with 1.8 million people does not really need to have 93 counties, we do, but legal mergers of governments are fraught with difficulty. If counties were merged, where would the county seat be? If a city is merged with its county, would the smaller cities in the county be included in the merger? And the transition costs of such a merger can eat up a lot of the long-run savings.

Certainly there are opportunities for economies of scale. City-county consolidation can achieve efficiencies where the city is a large portion of the county and services currently overlap. Spreading administrative costs over a wider population base can bring down per-unit costs for services, and in some cases service quality can be improved, especially for small governments.

But while there are possible savings, for some government functions the costs rise as the service area broadens. The costs for services such as public safety that involve high transportation costs have been found to increase over wider geographic areas, for example. Ideally, one would merge certain functions of government but not all. But this is not a practical solution. And beyond questions of efficiency, many citizens fear that a more-distant government would not reflect their interests well and that their communities would lose their identities. They may be right.

So it isn't hard to understand why most of these jurisdiction-consolidation proposals languish on the vine of legislative consideration. Yet the potential for savings is so important that it should not be allowed to slip away. The alternative with real potential for achieving service efficiencies is no secret: inter-local agreements, purchasing pools, sharing of specialized personnel and equipment, and in some cases either multi-county special districts or state assumption of services.

But the local governments that would most benefit from these alternatives often do not consider them. While management consulting is no panacea, I think many local governments would greatly benefit from a top-to-bottom efficiency analysis or management audit done by people who understand government. The results of such an analysis should be made part of the public discussion. It can provide a menu of choices for elected or appointed officials as they work through the real nitty-gritty issues of efficiency in government.

Simplistic solutions such as mergers are of limited relevance to improving efficiency in most cases, but public officials and managers need to vigorously pursue other forms of cost savings, and their citizens should demand it.